ICICI Bank Ltd., one of the largest private sector banks in India, in its Q3 earnings call highlighted strong fee income growth from transaction banking, cards, and payments, along with stable asset quality despite some unsecured loan delinquencies. Business banking continued to expand, supported by digitization and collateral security. The management discussed that its CASA deposit growth outperformed peers due to customer engagement, not pricing changes. Operating expenses remained flat despite tech investments, while employee costs declined due to retiral provisions. Provisioning remained stable at 50 bps, with no major increases expected, and Rural Infrastructure Development Fund (RIDF) balances reduced, easing regulatory concerns.
ICICI Bank’s reported exceptional Q3, with consolidated profit after tax surging 20% to INR13,847 crore and achieving a Return on Assets of 2.4% in October-December. The bank’s assets expanded 14.7% to INR25,31,488 crore, with a robust domestic loan portfolio growth of 15.1% to INR12,82,778 crore, including a 31.9% business banking expansion. Maintaining stable asset quality with a net NPA ratio of 0.42% and a high provisioning coverage ratio of 78.2%, the bank also preserved a 39% CASA ratio and improved its Capital Adequacy Ratio to 14.71%.
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Financial/Operational Metrics:
- Interest Earned: INR6,703 crore, up 15% YoY.
- Profit After Tax: INR13,847 crore, up 20% YoY.
- Diluted EPS: INR18.25, up 16% YoY.
- Net Interest Income (NII): INR20,371 crore, up 9.1% YoY.
- Core Operating Profit: INR16,516 crore, up 13.1% YoY.
- Fee Income: INR6,180 crore, up 16.3% YoY.
Outlook:
- Focus Areas: Expanding customer-centric solutions, technology investments, strengthening operational resilience.
- Growth Strategy: Expanding retail and business banking segments while improving digital services and distribution.
Analyst Crossfire:
- Provisioning & Write-Backs (Mahrukh Adajania – Nuvama Wealth): Provisioning remained stable, with improvements in corporate loan quality and recoveries from past write-offs contributing to the provision line. The reported credit cost for the quarter stood at 37 bps (Anindya Banerjee – CFO).
- Deposit Growth & Liquidity (Mahrukh Adajania – Nuvama Wealth): Sequential deposit growth slowed due to a reduced funding requirement, system-wide loan growth moderation, and the CRR cut in December. However, ICICI Bank maintained strong liquidity, with an average LCR of 123% (Anindya Banerjee – CFO).
- Operating Expenses & Efficiency, Employee Headcount (Rikin Shah – IIFL): ICICI Bank continues to optimize costs through process streamlining while investing in IT security, branch expansion, and business growth. The cost base is managed without a strict correlation to revenue growth. The bank now discloses headcount on an annual basis rather than quarterly (Anindya Banerjee – CFO).
- Corporate Loan Growth & Margins, Retail Loan Growth Slowdown (Kunal Shah – Citigroup, Piran Engineer – CLSA): Corporate lending growth was driven by selective opportunities without margin dilution. The focus remains on maintaining a balanced risk-return approach rather than pursuing large, finely priced loans. Mortgage growth slowed from 16-17% to 11% due to price competition and softer demand, particularly in the affordable housing segment. Auto loan growth was impacted by market trends but is expected to fluctuate with new model launches (Anindya Banerjee – CFO).
- Fee Income Growth & Strategy, CASA Growth Outperformance (Nitin Agarwal – Motilal Oswal, Param Subramanian – Nomura): ICICI Bank sees strong traction in fee income across transaction banking, cards, and lending-linked fees. The focus is on driving customer adoption of digital platforms rather than targeting a specific proportion of income. ICICI Bank’s CASA growth remains strong at 13%, outperforming peers. The bank’s strategy is to increase customer engagement rather than focusing on specific deposit types. Digital adoption has contributed to customer stickiness (Anindya Banerjee – CFO).
- Provisioning Cost Outlook, RIDF (Chintan Joshi – Autonomous): Provisioning trends remain stable, with corporate recoveries contributing to lower costs. The 50 bps credit cost target remains intact, and no major concerns are expected for the next 12-18 months. ICICI Bank’s RIDF balance has been declining. Any future increases will have minimal impact on financials. The bank actively uses Priority Sector Lending Certificates (PSLC) purchases to meet regulatory compliance in priority sectors (Anindya Banerjee – CFO).
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